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The Debt’s in the Details, Part I

A quick perusal of my account will reveal that I’ve reached my limit. Yes, I know, I’ve done this dozens of times, and I know I haven’t paid my bills. Still, this increase is incredibly important to me; rather, it is VITAL to my very existence.

You see, I’m concerned that my household will shut down unless I obtain this increase. My family and I will face an inability to pay our bills; bills like my weekly massage and manicure and my husband’s country club membership. My daughter will have to go without her Jimmy Choo shoes, and my son will have to face going without the brand new gold-plated iPhone he’s already got on hold. Fido won’t get his diamond encrusted collar and dish to mach. Plus, those MasterCard peeps have been pestering me something AWFUL for the money I’ve spent on their plastic. We’ve got obligations that we just neeeeed to pay with this increase.

Beyond that, I’ve promised a lot of my friends (and some of my enemies) that I’d treat each one of them to a nice steak dinner at Ruth’s Chris Steakhouse in downtown Chicago. I also promised all my friends (and some of my enemies) that I’d pay for their cars and their kids’ education. Heck, I promised my whole office I’d pay for their kids to go to school. Especially the ones that I think might play a role in that promotion I’ve had my eye on.

All I’m asking for is the credit needed to pay my bills and other obligations as listed above.

Yours Truly,

Jane Doe

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This letter would be laughed out of the office of any credit card, large or small. No one would expect their credit to be increased if the customer has shown no interest in paying the creditor back. Moreover, most would agree that increasing a person’s credit with the intent of spending will result, indeed, in taking on new debt. Furthermore, many people also consider borrowing more to pay debt you’ve already amassed doesn’t erase the problem; it simply shifts it around.

Our country doesn’t have a Visa credit card; we have something called a “debt ceiling.” Basically, it’s the maximum amount our government is allowed to go into debt.

Consider this recent statement from a well-known politician, and compare it to our financially irresponsible character, Jane Doe:

“Now, this debt ceiling — I just want to remind people in case you haven’t been keeping up — raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy. All it does is it says you got to pay the bills that you’ve already racked up, Congress. It’s a basic function of making sure that the full faith and credit of the United States is preserved . . . It’s always a tough vote because the average person thinks raising the debt ceiling must mean that we’re running up our debt . . .”

If our debt ceiling is like our credit limit, and if we’ve just indicated we’ll be . . . spending . . . the extra money, is that not “running up our debt”?

Okay, maybe we can chalk that up to a finance error. Maybe the speaker spoke without giving it much thought . . . maybe the speaker isn’t an accountant.

Plus, the speaker said we had raised it over a hundred times in the past and our debt didn’t increase, so history seems to be on our side, right? Except that, as one columnist put it, “ isn’t the fact that the U.S. has hit its debt ceiling ‘over a hundred times’ – and, thus, has had to keep raising it – proof that raising the limit does, in fact, lead to increased debt?

Consider your credit card. What logic would there be in calling your creditor every six months to ask for a limit increase upon limit increase upon limit increase, unless you constantly spent to your limit?

Okay, okay, there’s some hope at least—the speaker tells us that raising our nation’s credit limit yet again doesn’t “promote profligacy.” In other words, that it doesn’t “promote irresponsibility.” What then, would we call our fictitious Jane Doe, someone who only earns $55,000 annually but spent $96,500 this year; someone who doesn’t pay her bills and has a bad credit score; someone who has piled up $366,000 in credit card debt, yet wants to fix the problem by asking for a bigger credit card?

Okay, okay, okay . . . maybe the speaker is saying this because our national debt has decreased over the last few years despite the various credit, and as such we should trust that our government won’t overspend itself this time, right? Much like Jane Doe, whose income is just $55,000 annually yet she’s sitting on $366,000 in debt, our debt has increased more in the last 5 years than in nearly all of the over 200 years of American history that preceded them.

A senator once lamented that “it’s a sad state of affairs—we just voted to increase the debt limit. The U.S. total debt at this point exceeds 8 trillion dollars; that’s 8 trillion with a T. So, we’ve got to get our fiscal house in order here Washington; I’m not sure it’s going to happen under the current leadership in Congress.”

The first statement was President Barack Obama on September 18th, 2013. The second was Senator Barack Obama on March 16th, 2006.

2006: “It’s a sad state of affairs—we just voted to increase the debt limit.”

2013: “. . . Raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy. . . It’s always a tough vote becausethe average person thinks raising the debt ceiling must mean that we’re running up our debt”

Funny how President Obama was one of those “average people” just seven years ago . . .

Are we to accept that the opposite is true today, and be done with it? Are we really to accept that today our President staunchly advocates for something that just seven years ago he just as staunchly decried? Are we really to accept the premise—yet again—that the national debt when he was Senator Obama was somehow criminal, but yet every dime of the nearly seven trillion (with a T) dollar increase under his watch as President Obama is necessary and proper?

What’s more, are we to also accept the President’s premise that raising the debt ceiling in order that we may then spend it isn’t increasing the debt? To be sure, what our government spends our money on can certainly be considered a matter of opinion. It can be a matter of political tendency towards one direction or another, and we debate this daily. To say, however, that raising our debt ceiling isn’t an increase in the debt cannot be up for debate. It is, quite simply, untrue. Just like Jane Doe would be lying if she says that raising her credit level in order than she may pay her bills wouldn’t increase her debt, President Obama was entirely dishonest when feeding the American people the exact same premise.

Do we not demand honesty from our employees? From our children? From our friends? From our business partners? Demand honesty, then, from our leaders; especially from our president. Demand responsibility. Demand that our President offer an explanation for so blatant a hypocrisy, and for such blatant dishonesty.

Demand that our leaders be held to the very same standards that our checkbooks and budgets create for our personal finances. When we don’t pay our bills and manage our debt, we lose privileges like buying a home or a car; in some cases, we’d have those items taken from us. Why then should our government’s behavior be treated any differently? Quite a few political leaders were unseated in 2010 for just these reasons. It can be done again—but your US Representative or Senator will do nothing if his or her feet are not held to the fire.

These aren’t meaningless numbers. These are real, honest-to-goodness dollar bills that with each day diminish in value. Just like Jane Doe’s creditors will eventually come to collect their money, our nation’s creditors will grow tired as our bloated economy hangs like a dead weight around the neck of our future generations. We stand at a precipice, and all it takes is one . . . last . . . straw.

Instead of perpetuating the debt endlessly—whether it’s this president or any other—we must instead turn our focus on things that stabilize, heal, and grow our economy. Increasing our credit without any thought to ending the frivolous and thoughtless spending that brings us to the brink every few years will not fix the problem; it will only mask it. The “Golden Rules Out,” as author Peter Vessenes puts it, are our only way out.

You’re absolutely right. This is, to borrow a word from the President, “profligacy” at its zenith. Only I fear that this isn’t the zenith of our government’s ability to stifle freedom and behave irresponsibly . . . isn’t it terrible to think that it can, (and history shows us it probably will) get worse?